Srinagar, May 19 (PTI) With companies indicating a
possible rise in prices on the Goods and Services Tax rollout
from July 1, the finance ministry today warned India Inc
against raising rates arbitrarily in anticipation of the GST.

The tax department may invoke the anti-profiteering
clause after the mechanism is put in place and may look into
balance sheet of companies if they have gained from the GST
and whether the benefits have been passed on to consumers.

"The machinery for the anti-profiteering authority may
not be ready at present but any change in prices will be
called into questioned," Revenue Secretary Hasmukh Adhia said,
adding that any fluctuations in prices will be closely
monitored.

The GST Council in its two-day meet finalised the rates
for goods and services, giving companies adequate time to work
out their pricing policies.

Adhia said the government will soon begin work on setting
up an anti-profiteering agency, as proposed in the GST law and
the tax department may even initiate suo motu action against
firms.

"We expect companies to cooperate. We hope we don't have
to use the weapon (of anti-profiteering authority)," he said.

The GST Act includes the provision of setting up an
anti-profiteering authority to ensure that companies pass on
the benefit of tax reduction to customers.

The GST Council has fitted the goods and services in tax
brackets of 5, 12, 18 and 28 per cent.

Adhia said that despite the higher standard rate of 18
per cent, service providers will get input tax credit that
will lower the effective incidence of the GST to around the
current incidence of 15 per cent.

The tax department feels tax cut benefits should be
passed on to consumers through more transparent billing.

Several analysts have opined that consumers may have to
bear the brunt of the higher tax.